Short term plans encompass the period of one year. Accordingly they are also called annual plans because the actions for the period of one year are linked with the budgets or development plan of the govt. Which is presented after one year. In these budgets the financial aspect of the plan, i.e. The financial sources and financial expenditures are shown. In the annual developmental plans the items pertaining to capital budgets, i.e. The capital revenue and capital expenditures are; Such plans or development plans are approved by the govt. Accordingly the ruling government. Gets the authority from the parliament to spend the money. In such plan an adjustment is made in between the resources and targets of one year.The short term plans are concerned with the capital formation in the country. Accordingly such plans are aimed at providing roads, electricity, water supply, water- drainage, education and shelter like facilities. Short run plans are concerned with utilizing the existing productive capacity or efficiency. These plans control and regulate aggregate demand with the help of budget policy, monetary and credit policy.The capitalistic as well as mixed economies are always preying to unemployment, inflation and deficit in BOP. In the period of short run, by controlling aggregate demand, the above mentioned problems can be controlled. For this purpose, fiscal, monetary and income policies can be followed.